Facebook (FB) Now Less Than Half its IPO Price

The Great Facebook (NASDAQ: FB) Sell-off continues.

Shares of the social-networking giant declined another 1% early this morning, pushing the stock below $19 for the first time ever. The stock is now trading for less than half its May 18 IPO price.

The latest sell-off was expected.

Some 400,000 Facebook shares became eligible for release last Thursday as the first of several lock-up agreements expired. Lock-up agreements are contracts that prevent major investors in an IPO – venture capitalists, company executives, etc. – from selling their shares until a certain amount of time elapses.

Lock-up agreements typically last between 120 and 180 days. For Facebook, the first of those agreements expired last week, freeing approximately 10% of all outstanding shareholders from the IPO contract that previously prohibited them from selling their shares.

The next two months will bring another two rounds of lock-up releases. By mid-November, close to 70% of all outstanding Facebook shares will be eligible for sale.

The stock has fallen 11% since the first set of lock-up agreements expired. Things are likely to get even worse before they get better.

Investors wanting to buy Facebook shares may want to wait another couple months while the stock weathers this lock-up release storm.

Two months from now, Facebook may be so beaten-down that it will suddenly be available at a major discount.

A stock that began public trading at more than 100 times trailing earnings after its IPO is now on the verge of becoming a bargain.

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